A blog created by an MBA Candidate pursuing the CFA Designation. I cover tech stocks, gold mining and base metals mining companies.

Sunday, April 17, 2011

US markets fell this week on weak earnings

US markets rose on Friday despite worries about weak bank earnings. The S&P 500 gained 5.16 points or 0.39% to 1,319.68. The Dow rose 56.68 points or 0.46% to 12,341.83. Markets were faced with weaker-than-expected earnings from Alcoa and Google earlier in the week. For the week, the S&P 500 fell 0.6%, while the Dow lost 0.3%.

Disappointing initial jobless claims

On Thursday, US initial jobless claims for the previous week were reported to have risen 27,000, to 412,000. This was larger than the 380,000 that economists expected.

Euro zone troubles continue

Bad news from the euro zone debt crisis is now a regular occurrence. Moody's downgraded Ireland's rating this week to just above junk bond status.

China reports strong inflation

On Friday, China reported March CPI of 5.4%, higher than the 5.2% that markets expected. As a result, mining shares fell, as markets anticipated further tightening measures by the Chinese government.

Gold shines

As a result of the continuing crisis in the euro zone, and strong inflation in China, gold reached another record high of US$1,486/ounce on Friday.

Looking ahead to next week

With the combination of weak earnings, a continuing euro zone crisis, more tightening measures in China and an unresolved disaster in Japan, investors can expect markets to head lower next week.

Bailout talks are still ongoing for Portugal, so a deal has not been reached. Today, the True Finns party, which is opposed to euro zone bailouts, made strong gains in the Finnish election. This will likely add to negative sentiment on Monday. Investors had been expecting an improving inflation picture in China. Thus, March's CPI of 5.4% will hurt commodities and commodity stocks, as more tightening measures cool demand.